Concerns of imposing a stamp duty on the Egyptian Exchange (EGX) has overshadowed the EGX trading last week, as the Egyptian indices painted the market with red; however, the indices abandoned those concerns and moved into the green zone. Will they continue their climb in the coming sessions?

Some traders predicted that the application of the stamp duty tax will determine the stock market performance in the current week.

Minister of Finance Amr El-Garhy said on Thursday that the ministry studied the stamp duty tax carefully before applying it, to avoid unfavourable effects on the stock market. Several Egyptian institutions tend to sell shares during Monday’s trading session, which caused panic among traders due to a potential decline in the market after the official announcement was made that the state planned to implement the tax.

In the middle of last week, everyone hoped the Commercial International Bank’s (CIB) stocks would lead a rebound in the market, after the announcement of the annual coupon payments report.

Tarek Abaza, managing director of the brokerage sector at Naeem Holding, said that the current situation is normal after recent gains of up to about 50% in the stock market, as a result of the flotation of the Egyptian pound. He added that the market witnessed a corrective movement accompanied by confusion regarding the application of the stamp duty tax on trading, as well as US policies.

The director of the technical analysis division of Osool Securities Brokerage, Ehab Saeed, said that the negative atmosphere will continue in the stock market during the current period due to the negative reports of the stamp duty, which increased the prospects of more declines in the current week’s trading. Saeed added that the new tax reports have led to a significant decline, which implies a difficult period for the stock market, especially with the lack of information about the future of the tax and its rate. Saeed advised the traders to maintain their stocks until the government announces its position on the application of the new tax on the stock market.

Hesham Hassan, head of technical analysis at Acumen for Securities, predicted that the market will move between 12,400 and 12,950 points during this week’s trading, in light of the low purchasing power in the market. He pointed out that Egyptian shares witnessed a significant increase after the flotation of the Egyptian pound, so the market needs to be calm to resume its upward trajectory on the medium-term.

Hassan added that the market aims to reach 15,000 points on the short-term, after breaking a strong resistance level of 12,000 and 10,000 points since the flotation. He expects the market will witness further hikes in the coming period, even though the market has made gains in profits on the short-term.

During the last week, EFG-Hermes’ shares increased by 2.51% to close at EGP 24.53, dominating 18% of the total trading value, equivalent to 1.4 times the average trading value of the share for a period of 30 days, at EGP 157.2m. Elsewedy Electric’s shares increased by 2.16% and closed at EGP 84.50 per share. The foreigners’ purchases in Thursday trading contributed to a slight rebound in the market, with a total trading of EGP 1.22bn. Foreign investors recorded net purchases of EGP 21.7m, while Egyptian and Arab investors achieved net sales of EGP 12.3m and EGP 9.4m, respectively, on Thursday.

At the end of January, foreign and Arab investors ended their trading with net purchases of EGP 8.03bn and EGP 130.61m, respectively, while Egyptian investors concluded their trading with net sales of EGP 8.16bn.

The petrochemical sector shares experienced strong hikes during the end of the week, led by Misr Fertilisers Production Company’s (MOPCO) shares which increased by 10% for the second consecutive day and reached EGP 43.01 per share with a total trading volume of 21,900 shares.

Alexandria Mineral Oils Company’s (AMOC) shares also increased by 10% and recorded EGP 92.91 per share, following the company’s announcement that it intends to issue global depository receipts, as well as divide the nominal value of the shares, with total market orders of 192,790 shares worth EGP 17.4m. Pachin Paints and Chema Industries’ shares also increased by 10%, reaching EGP 24.29 and EGP 4.86, respectively.